[트럼프 재집권] Interview with Wendy Cutler, a key figure in the Korea-US FTA
Major trading partners, including China, ‘increase tariffs’… Used as leverage in negotiations to reduce trade deficit
A request for renegotiation of the Korea-US FTA cannot be ruled out… Korea emphasizes efforts to expand investment in the United States
Measures to increase imports of U.S. products must be presented.
“Korea must prepare for aggressive measures by the incoming Donald Trump administration to reduce the trade deficit.”
Asia Society Vice President Wendy Cutler, who served as deputy U.S. Trade Representative (USTR) during the Barack Obama administration and was the chief U.S. representative during the Korea-U.S. Free Trade Agreement (FTA) negotiations during the George W. Bush administration, had a video chat with the Dong-A Ilbo on the 8th (local time). In an interview, he said, “It is highly likely that President-elect Trump will push for a tariff increase to resolve the trade deficit within the first 100 days of his inauguration.”
He expressed concern about the possibility that President-elect Trump would demand renegotiation or abolition of the Korea-U.S. FTA, saying, “We can’t say, ‘It will never happen.’” He continued, “I hope (President-elect Trump) will highly evaluate Korea’s investment efforts in the United States,” and advised that Korea could consider agreeing to increase imports of American products or reduce exports. The following is a Q&A.
―What impact do you think the US presidential election will have on the global economy and trade?
“We still have to watch the House of Representatives, but it is clear that the Republican Party achieved great results by winning both the presidential election and the Senate. Trade deficit and tariffs have been important topics that President-elect Trump has addressed for several years. Therefore, I believe he will try to resolve this as a priority within the first 100 days after taking office. President-elect Trump is likely to push for increased tariffs on all major trading partners, including China. “It is unclear whether exceptions will be made for countries that have signed an FTA with the United States, such as Korea, but the world will have to prepare for tariff increases in the early stages of the incoming Trump administration.”
―The first Trump administration also increased tariffs on Korea and China. How do you think season 2 will be different?
“There is a difference in direction. While he used tariffs to bring China to the negotiating table during his first term, I think he is now more interested in bringing manufacturing jobs back to the U.S. through “decoupling” from China. However, I believe that the universal basic tariff, which is expected to have a tax rate of 10 to 20 percent, is intended to be used as negotiating leverage by focusing on countries with large U.S. trade deficits.”
-Economists worry that tariffs could lead to disastrous results.
“It is highly likely that tariff policy will have an impact on inflation or overall economic activity in the U.S. economy. However, the impact
―Do you think the incoming Trump administration may seek to renegotiate or scrap the Korea-U.S. FTA?
“When it comes to President-elect Trump, you can’t say, ‘It will never happen.’ The incoming Trump administration will be very concerned about the U.S. trade deficit with Korea, which has ballooned over the past four years. In my view, most of the increase in the trade deficit is related to the rapid increase in investment by Korean companies in the United States. However, I think Korea should prepare for the Trump administration’s aggressive measures to reduce the trade deficit. The Trump administration will not be particularly concerned about violations of World Trade Organization (WTO) rules or violations of the Korea-U.S. FTA. If the United States imposes tariffs on Korea, Korea may also respond with retaliation. But given the close ROK-U.S. alliance, I hope the two countries can find a way forward. This could include Korea agreeing to increase imports of American products or reduce exports.”
―President-elect Trump said during the presidential campaign that he would take jobs away from Korea.
“For the United States, it is good that Korea has expanded its investment in America’s strategic industries. Therefore, we hope that the Trump administration will value and consider Korea’s investment efforts before taking aggressive actions not only on security issues but also on Korea, a close ally and partner.”
―President-elect Trump also said he would abolish China’s most-favored-nation trade status.
“Abolishing China’s most-favored-nation trade treatment requires congressional approval. Therefore, I think it is more likely that the incoming Trump administration will use Section 301 to increase tariffs by at least 60 percentage points rather than abolish most-favored-nation treatment. The US-China trade war that occurred during his first term had a significant impact on all countries in the world, especially the Indo-Pacific, so all countries must prepare for it. However, US-China trade friction is not necessarily bad for everyone. “For example, blocking the export of Chinese electric vehicles to the U.S. could be of great help to Korean automakers.”
―There are many predictions that former U.S. Trade Representative (USTR) Robert Lighthizer will take on a key role in the next administration.
“He is very competent and understands the details of the trade. However, I do not agree with his focus on the bilateral trade deficit. Your negotiation style is also very different from mine. “He is heavy-handed with America’s trading partners and very difficult to work with.”
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Washington = Correspondent Moon Byeong-ki [email protected]
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Analysis of Impacts of Trump’s Incoming Administration on Korea-U.S. Trade Relations
Asia Society Vice President Wendy Cutler, a key figure in U.S.-Korea trade negotiations, recently discussed the potential implications of the Donald Trump administration on Korea-U.S. trade relations during a video interview with the Dong-A Ilbo. She emphasized the likelihood of aggressive trade measures, particularly in the form of tariff increases, as a pivotal component of Trump’s early policy actions aimed at reducing the trade deficit, possibly within his first 100 days in office.
Expected Policy Directions
Cutler articulated significant concerns regarding the future of the Korea-U.S. Free Trade Agreement (FTA). Although she hopes for recognition of Korea’s contributions to U.S. investments, the incoming administration’s focus appears to be on leveraging trade deficits to negotiate terms more favorable to U.S. interests. Specifically, she highlighted the potential for Trump to request renegotiations or even the abolishment of the FTA, hinting that the administration may not be stringent about adhering to World Trade Organization (WTO) rules during this process.
Implications for Tariffs and the Economy
The possibility of increased tariffs is anticipated to have far-reaching effects on both the U.S. economy and global trade flows. Cutler noted that imposing tariffs could exacerbate inflation and impact overall economic activity. However, she stressed the significance of observing how the House of Representatives will influence trade policy moving forward.
Investment and Economic Contributions from Korea
Cutler also stated that while the U.S. trade deficit with Korea has escalated, much of this can be attributed to increased investments by Korean companies in American strategic sectors. She expressed hope that the Trump administration would consider this investment positively and avoid overly aggressive measures that could harm the close alliance between the two countries.
China’s Trade Status and Broader Concerns
With regard to relations with China, Cutler mentioned that efforts to alter China’s most-favored-nation status would require congressional approval, suggesting a preference for tariff increases via Section 301 as a more feasible approach. She acknowledged that U.S.-China trade friction, while disruptive, could inadvertently benefit other countries, including South Korea, in certain sectors, such as automotive manufacturing.
Conclusion and Recommendations
as the Trump administration prepares to take office, Cutler’s insights underline the complexities of U.S.-Korea trade relations. The need for Korea to adapt to potentially aggressive tariff policies and a willingness to negotiate trade terms is paramount. Cutler recommends a proactive approach, where Korea may need to consider increasing imports from the U.S. or reducing its exports to mitigate the looming trade tensions. The upcoming months will be critical in assessing how these trade dynamics will evolve amidst changing political landscapes in the U.S.